WEEKLY SUMMARY OFFICE OF CURRENT INTELLIGENCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004300040001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 21, 2016
• Document Release Date: June 4, 2008
• Sequence Number: 1
• Publication Date: December 20, 1963
• Content Type: SUMMARY

20 December 1963
OCI No. 0311/63
Copy No. 77
WEEKLY SUMMARY
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
State Dept. review completed
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GROUP I Excluded from automatic
downgrading and declassification
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(Information as of 1200 EST, 19 December 1963)
SOVIET 1964-65 ECONOMIC PLANS
Khrushchev's long-range program for development of
the Soviet chemical industry is to be accompanied
by retrenchment in other parts of the economy dur-
ing the next two years.
Page
1
SIGNIFICANCE OF AGREEMENT ON BERLIN CHRISTMAS PASSES 3
The Communists view as "official" the talks between
East and West Berlin negotiators which achieved the
agreement and consider them a boost to Moscow's "free
city" proposal for West Berlin. Willy Brandt, on the
other hand, regards them as only "technical" and as
no setback to his stature in West German politics
HANOI UNDERSCORES ITS COMMITMENT TO THE VIET CONG
North Vietnam's propaganda build-up on the anniver-
sary of the formation of the Viet Cong's political
arm suggests confidence in the insurgents' military
position despite US backing of the South Vietnamese
Government.
AS IA-AFRICA
CONSTITUTIONAL GOVERNMENT TAKES OVER IN SOUTH KOREA 7
President Pak Chong-huff's control of the new Nation-
al Assembly is unlikely to end political infighting
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ASIA-AFRICA (continued)
His most pressing problem is to stabilize the infla-
tionary economy.
RIGHT-WING FORCES MAINTAIN PRESSURE IN LAOS
They are considering further initiatives, but there
are indications that Pathet Lao resistance is stif-
fening.
AREA NOTES
On Turkey and Iran
FRANCE EXPLORES IMPROVED RELATIONS WITH PEIPING
Paris is trying to increase trade with the Ch;nese
Communists, but French officials deny that early
diplomatic recognition is in prospect.
AREA NOTE
On Italy
DEVELOPMENTS IN FINLAND
While Urho Kekkonen has continued efforts to im-
prove Finnish-Soviet relations by his sixth visit
to the USSR as President, Finland is going through
a cabinet crisis for the second time in four months.
INCREASING CUBAN CONTROL OF MILITARY INSTALLATIONS 14
Raul Castro recently said the coastal defense cruise
missiles now are in Cuban hands, and Cuban involvement
in the air defense system has also been expanding.
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WESTERN HEMISPHERE (continued) Page
POLITICAL REPERCUSSIONS OF RECENT EVENTS IN BOLIVIA
The split between President Paz and Vice President
Lechin seems unbridgeable, and a showdown is like-
ly when their party convenes next month to select
a presidential candidate for next June's election.
POSSIBILITY OF CABINET RESHUFFLE IN BRAZIL
President Goulart is under pressure to oust the
finance minister, the education minister has al-
ready resigned. and the minister of industry and
commerce reportedly is about to do so.
INSURGENCY AND INSTABILITY IN DOMINICAN REPUBLIC
The provisional regime has been bolstered temporar-
ily by its successful military action against the
insurgents and by US recognition, but seems unlikely
to meet the pressing need for effective government.
AREA NOTES
On Honduras and British Guiana
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Khrushchev's long-range
program for development of
the Soviet chemical industry is
to be accompanied by retrench-
ment in other parts of the
economy during the next two
years. Housing,services for
the consumer, and some heavy
industrial production are to be
affected by the economic re-
orientation scheduled in the
1964-65 plan and budget an-
nounced this week at the Supreme
Soviet. It seems very likely,also,
that there will be a slowing
in the rate at which military
expenditures have increased
since 1960.
The Chemical Industry
The Khrushchev program is
clearly discernible in the top
economic priority given to the
chemical industry, chemical
machine-building, the oil and
gas industry, and the pulp and
paper industry--associated
with providing packaging mate-
rials for the chemical program.
Investment in the chemical indus-
try is scheduled to increase 44
percent in 1964 and 31 percent
in 1965. These rates are higher
than those achieved in recent
years and are well above the
annual average which must be
achieved to comply with Khru-
shchev's call for direct invest-
ment of 25 billion rubles ($50
billion) in the chemical indus-
try in the next seven years.
Actual production increases
for several. major commodities
in the industry have been low-
ered from Seven-Year-Plan goals
set in 1958, reflecting perhaps
a more realistic estimate of
what can be achieved in the near
future. The 35-million-ton goal
for chemical fertilizer for 1965
still stands, however, and if
achieved, will require a 75-
percent increase over the next
two years--far above past per-
formance. The special place
agricultural requirements have
in the program is exemplified by
the concentration of two fifths
of all chemical investment on
developing fertilizer and
doubling the output of herbicides
and insecticides.
Agriculture
Budgeted agricultural in-
vestment is to increase sharply
--presumably in part to provide
storage facilities and equipment,
including fertilizer equipment.
Irrigation, another aspect of
the Khrushchev program for agri-
culture, is scheduled to increase
substantially during the next
two years in an apparent attempt
to reach the level called for in
the original Seven Year Plan.
Judging by Khrushchev's state-
ments last week, longer range
goals have not yet been worked
out.
Resource Shifts
According to the plan, the
share of total investment de-
voted to the chemical industry,
agriculture, light and food
industries, and associated
branches will grow from 26 per-
cent in 1963 to 35 percent in
1965. The question of which
sectors of the overcommitted
Soviet economy are to give way
for this change can only par-
tially be answered. With the
exception of those for chemistry
and oil and gas, investment
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PLANNED PERCENTAGE INCREASES IN
SOVIET GROSS INDUSTRIAL PRODUCTION
Total
8.1
8.0
8.4
8.4
Group A
(mainly
8.8
8.5
8.9
8.9
heavy
industry)
Group B
(mainly
6.6
6.3
7.0
7.0
ansumer
industry)
INVESTMENT IN SOVIET CHEMICAL INDUSTRY 1959-1970
( INDEX )
Imo- PLAN -fI-r PROJECTED" 1
*Based on Soviet plan to invest 25 billion rubles
in the chemical industry during 1964-1970.
SOVIET ECONOMIC PLAN SELECTED INDICATORS
Chemical
Fertilizer
million
metric
tons
ons
million
1963
20
%
r-_. ---
15.6
Current
1965
35
Average
Annual %
Increase
32.3
Original
Seven-
Year
Plan Goal
for 1965
Oil
million t
metric
205
10.2
240
8.2
230-240
Gas
tons
billion
cubic c
88
17
128
18.3
150
Electric
meters
billion
kwt.
407.9
10.5
508
11.5
hours
million
million
units
1965 Goal
Revised at
22nd Party
Congress
(1961)
240+
some
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data on the various branches of
heavy industry were not given.
Ferrous metallurgy may be
one activity from which resources
will be shifted. The 1965 pro-
duction targets for steel and pig
iron have been dropped from the
revised goals announced at the
22nd party congress in 1961 to
those set in the original Seven
Year Plan. The increases now
scheduled are among the lowest of
recent years and are to be achieved
in large part by better use of
existing facilities rather than by
construction of new capacity.
Output of some types of
machinery and equipment apparently
will also suffer. Production of
chemical and oil equipment is to
rise 50 percent in the next two
years, but the over-all increase
in machine building is only 10
percent a year--somewhat less than
planned in recent years.
The Consumer
It is a paradox that during
the next two years some consumer
programs will be subordinated to
the chemical expansion, which it-
self is being publicized as the
key to an improved standard of
living. No increase is planned
for urban housing construction,
indicating that the seven-year
goal will fall short of fulfillment
by 14-16 percent. Allocations
for health and educational activi-
ties will grow but at somewhat
reduced rates.
On the other hand, the Soviet
consumer will probably see some
promise in the 53-percent increase
planned for the development of food
processing and light industries in
1964-65--well above past achieve-
ments. That this investment will
not be immediately translated into
large increases in consumer goods
is evident from the modest goals
planned for textiles and shoes.
A notable exception is the goal
for refrigerators--nearly a 100-
percent increase in the next two
years. Although this would far
from satisfy demand, the target is
impressive.
Military Expenditures
There is no doubt that the en-
tire plan and budget presentation
was intended to exemplify Moscow's
present posture of "peaceful co-
existence." Military expendi-
tures in the 1964 budget are about
4 percent below those planned for
1963. Since the explicit military
budget contains only a portion
of total military expenditures--
estimated to be on the order of
70 percent this year--and since
its composition is subject to
manipulation by Soviet leaders,
the budget figure is not necessarily
an accurate criterion for measuring
change.
However, the forthcoming sub-
stantial requirements for civil-
ian machinery and equipment and
the apparent 10-11 - percent annual
increases in over-all investment
planned for the economy suggest a
pending slowdown in some military
programs.
The science allocation, much
of which goes into military re-
search programs, is scheduled to
increase in 1964-65 at the lowest
planned rate of recent years.
However, past plans have often
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Period during which 18 December 1963 to 5 January 1964.
passes will be issued:
To be Issued by: East German postal clerks.
One converted school gymnasium In each of West
Berlin's 12 boroughs, These facilities to be under
the administration of West Berlin postal authorities.
Validity of individual For one day from 0700 until 2400 (New Year's Eve
passes: until 0500).
Frequency of issuance: Each eligible West Berliner may obtain as many
one-day posses as he wishes.
Crossing points: Four vehicle and pedestrian crossing points through
the Wall at Chausseestrasse (French sector),
Invalidenstrasse (British sector), Oberbaumbruecke
and Sonnenallee (US sector), plus the Friedrlchstrasse
elevated railway (S-bahn) station.
Persons eligible: All West Berliners having relatives (defined as spouses,
parents, children, grandparents, grandchildren, sisters,
brothers, aunts, uncles, nieces, and nephews) in East
Berlin, However, no one charged with violating an East
German law will be eligible. (This provision will elim-
inate all post-1957 East German defectors,)
Number eligible: West Berlin police estimate 750,000 eligible, of whom
they expect only one third to apply,
n
- Borough boundary
A Pass issuing office
BORDER CROSSING POINTS
West Berliners only
? Other Western traffic
)KAll Western traffic
I "IIERGARTEN
2. KREUZBERG
3 SCIIOENEBERG
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SIGNIFICANCE OF AGREEMENT ON BERLIN CHRISTMAS PASSES
The terms of the agreement
under which West Berliners are
to be permitted to visit East
Berlin during the Christmas
season will enable the USSR, the
East German regime, and Willy
Brandt all to claim important
tactical victories. The East
Germans, encouraged by their
success in establishing what
they term an "official" contact
with the West Berlin government,
are likely to step up their ef-
forts to move their relation-
ship with Bonn as well from a
"technical" basis to some sort
of government-to-government
level.
The Russians and the East
Germans probably view the direct
talks with West Berlin officials
as a significant advance in
their long-range goal of chang-
ing the legal status of the city
by casting West Berlin in the
role of an independent and via-
ble entity carrying on bilateral
discussions with foreign coun-
tries on a basis of equality.
Moscow probably hopes that this
will undermine the position of
the Western powers that their
rights in West Berlin flow from
the occupation status of the
city and will strengthen the
credibility of the Soviet "free-
city" proposal. The Communists
probably believe that the prece-
dent established in the talks
will encourage West Berlin of-
ficials to take or to respond
to further initiatives in the
future to obtain some allevia-
tion of the "human problem"
created by the Wall.
Brandt, for his part, has
fulfilled the ambition which
has driven him since the 17 Feb-
ruary elections to find a way
by which West Berliners can
visit their relatives in East
Berlin.
The negotiations were con-
ducted by a middle-level offi-
cial of the West Berlin Senat
and a state secretary of the
East German Culture Ministry--
a level considered "technical"
by West Berlin and "official"
by Pankow. The protocol signed
on 17 December can be interpreted
either way, stating as it does
that West Berlin's negotiator
acted "on instruction of the
chief of the Senat Chancery,
given on behalf of the govern-
ing mayor of Berlin." However,
East German Deputy Premier Abusch,
whose 5 December letter to the
Senat initiated the negotiations,
expressly declared in a press
conference that the terms of
negotiation "did not involve
recognition of two or three
states." In addition, the West-
ern announcement of the signing,
issued in Bonn in the name of
the Federal Republic and the
West Berlin Senat, underlines
that the action does not imply
recognition of East Germany.
The three Western comman-
dants, for their part, declared
that the arrangement "in no way
affects the status of Berlin,
which is defined in existing
agreements."
This enables Brandt, who
has been willing to stretch the
customary definition of "techni-
cal" contacts between West and
East Berlin, to declare that in
the present agreement he has
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TITO
Hale and hearty in 1949
With Khrushchev at their 1955 meeting.
At their 1963 get-together. Tito, perhaps
because he tints his hair, here looks
younger than his guest, who is in fact
two years his junior.
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not accepted the Communist
"three Germanys" theory. It is
not clear how much further he
would be willing to go with
the East Germans if they come
up with new proposals for West
Berlin - East German talks on a
"nontechnical" level. He evi-
dently believes, however, that
Tito is apparently no
longer deeply involved in the
administration of Yugoslav af-
fairs. In a conversation with
the US chargd on 5 December,
he exhibited a lack of factual
knowledge or broad understand-
ing on a number of foreign pol-
icy issues with which he would
have been fully conversant as
recently as a year ago. In re-
cent months, most of Tito's
statements on domestic issues
have indicated only a short-
lived interest and have seem-
ingly had only temporary effect
on regime policy.
Tito has long evidenced
a desire to divest himself of
many of his responsibilities.
In addition to taking numerous
long vacations in recent years,
last spring he formally relin-
quished the premiership and
the presidency of the country's
mass-political organization.
He acquired powerful deputies
to help handle his remaining
governmental duties. Apparently
Tito is already somewhat in-
sulated from the functioning
of his regime, except probably
the determination of policy in
the broader sense.
his conduct of the recent nego-
tiations has not alienated the
West Germans--who vigorously
oppose recognition of the East
German regime--or reduced his
chances of becoming head of the
West German Social Democratic
Party and running for chancellor
In addition to Tito's be-
havior during his interview
with the chargd, there is a
body of circumstantial evidence
to support these comments
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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Heavy emphasis is being
given this year in Hanoi to the
third anniversary of formation
of the National Front for the
Liberation of South Vietnam
(NFLSV), the semiovert political
arm of the Viet Cong insurgents.
The change in approach since
last year, when the anniversary
was given relatively little
attention, suggests a growing
confidence in Hanoi that the
insurgents can sustain and im-
prove their position despite
US backing of the South Viet-
namese Government.
By increasing their overt
association with the insurgent
cause, the Communist leaders in
the North are underscoring their
commitment to full prosecution
of the war, whatever the cost,
until a settlement favorable to
the Communists can be obtained.
Possibly at Peiping's urging,
recent North Vietnamese propa-
ganda has begun to portray a
close relationship between the
success of the Viet Cong effort
and that of the entire "National
Revolutionary Movement." The
propaganda exploitation of the
anniversary--the NFLSV was
founded on 20 December 1960--is
intended to spur increased sup-
port, internationally as well
as within Vietnam, for the Viet
Cong war effort.
The build-up for the week-
long campaign, which promises
to dwarf last July's extensive
"anti-US" campaign, began in
early December when the "strug-
gle" theme in support of the
Viet Cong began to receive front-
page coverage. The festivities
were officially launched in the
North Vietnamese capital on 15
December at a large rally attended
by a number of politburo members.
As part of the campaign,
North Vietnamese workers were
asked to contribute one day's
pay--no mean sacrifice for the
impoverished peasants--and stu-
dents have been urged to sell
"liberation" stamps to provide
support this year "in a practical
way." Party propagandists are
calling for increased efforts in
domestic production as one way
in which the North can signal its
intention to support the war.
There have been indications dur-
ing the past year that some in-
surgent leaders in the South had
questioned the degree of North
Vietnamese public backing for
the war.
A communiqud on 13 December
following a conference of the
Hanoi city party committee and
the army general staff called
on elements of the armed forces
in the North to mark the Front
anniversary by carrying out
"extensive propaganda" within
the ranks on the Viet Cong war.
Captured documents have estab-
lished that the North Vietnamese
Army is charged with supplying
cadres to organize and lead
Viet Gong units.
In the South, in connection
with the anniversary, the Viet
Cong have stepped up their armed
action. A special Front commit-
tee has issued a proclamation
calling for increased revolution-
ary fervor during the week.
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CONSTITUTIONAL GOVERNMENT TAKES OVER IN SOUTH KOREA
The South Korean Government
under Pak Chong-hui as Presi-
dent--which took office on 17
December--will be hampered by
the same divisive forces which
plagued Pak's military adminis-
tration and which seriously
handicapped efforts to stabilize
the country's inflationary econ-
omy.
Pak's Democratic Republican
party dominates the new National
Assembly, and former security
chief Kim Chong-pil controls
the party apparatus. Kim's
many enemies within the party
are likely to try to use the
legislative processes to wrest
power from him, but as long as
he retains Pak's backing, they
will be at a grave disadvantage.
Pak and his close associates
will continue to make the govern-
ment's major decisions. The
cabinet reflects a balancing of
factional interests and personal
rivalries, and the prime min-
ister, Choe Tu-son, although
widely respected, is likely to
prove a mere figurehead. Retired
general Chong Il-kwan, a former
ambassador to Washington, has
been named foreign minister,
presumably in the hope that his
American connections will fa-
cilitate the flow of US aid.
His appointment probably is also
designed to placate his sub-
stantial army following. The
economic ministries are headed
by experienced and competent
men who appear to have been
selected for their ability to
carry out, rather than formu-
late policy.
With elections over, the
leadership in Seoul is likely
to try to speed decisions on
several long-deferred problems.
Economic questions are most
pressing, for lavish pre-elec-
tion government spending aggra-
vated an already serious infla-
tionary situation. Within the
armed forces, discontent over
low pay and rising prices is
spreading. If these trends are
not checked, the regime's oppo-
nents might be able to turn this
dissatisfaction into open activ-
ity against the government.
Pak is also anxious to con-
clude the ten-year-old negotia-
tions for a normalization of
diplomatic relations with Japan.
He has his eye on the economic
and financial benefits South
Korea would derive from the
settlement, but remains handi-
capped by the latent anti-Japa-
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LAOS
CHINA ------ r
Luane Prabanc
NORM VIETNAM
Pak Sane Kam
THAILAND
Road
------ Track or trail
*I 1 Railroad
Pakse lz3
Dj
Attopeu
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RIGHT-WING FORCES MAINTAIN PRESSURE IN LAOS
Right-wing and neutralist
military forces, encouraged by
recent successes in northern
and central Laos are considering
further initiatives to exploit
what they term the "confused
and vulnerable" enemy. Their
plans call for a thrust sup-
ported by Meo and neutralist
troops, against Pathet Lao
positions on Route 4 southeast
of the Plaine des Jarres. The
prime objective is to occupy
Xieng Khouang town, the long
besieged provincial capital.
Farther south, the rightist
regional military commander
reportedly is considering mount-
ing operations against Commu-
nist supply routes from North
Vietnam.
There are indications,
however, that rightist initia-
tives may be facing stepped-up
Communist resistance. On 16
December, Communist forces--
reportedly North Vietnamese--
recaptured the key road junc-
tion of Lak Sao, which the
rightists had taken early this
month. The Communists retain
the capability to make sharp
countermoves in other areas.
The Pathet Lao have ex-
pressed new interest in arrang-
ing a meeting between Premier
Souvanna and their leader, Prince
Souphannouvong,to open the way
for a resumption of full Pathet
Lao participation in the coali-
tion government.
Military negotiations be-
tween the Pathet Lao and neu-
tralist factions, meanwhile, are
continuing. An early maneuver
by the Patbet Lao to re-establish
their alliance with the neutral-
ists has been sharply rebuffed,
and recent meetings have been
characterized by acrimonious
exchanges.
Coup rumors continue to
circulate in Vientiane. Most
of these center on plans by
right-wing military elements
allied with the Sananikone clan.
Vientiane military figures ad-
mit that they are keeping an
eye on elements which might be
involved in any coup attempt,
but largely discount the capa-
bility of pro-Sananikone forces
to mount a successful effort.
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Turkey: The three-week-
old cabinet crisis in Turkey
appears to be approaching a cli-
max following the failure of
separate attempts by both of
the major parties to bring the
minor parties into coalition
arrangements. Only a coalition
between the two major parties
themselves, Prime Minister Inonu's
Republican People's Party (RPP)
and the Justice Party (JP), or
a "national coalition" of all
political forces remain to be
tried.
Despite the disagreement
between the RPP and the JP on
most domestic issues, an asso-
ciation between them may prove
feasible. The politicians fear
that the military leaders may
exert their influence more di-
rectly than now if the crisis is
not soon resolved.
Iran: A slowdown in Iran's
reform program during recent
months has produced skepticism
among the populace over the gov-
ernment's intentions. Some of
the reform measures have been
modified, and they are being
laxly enforced.
At the same time, the large-
scale redistribution of landed
estates early this year has pro-
duced considerable economic dis-
location. Tehran has recently
sought to restore confidence
and stimulate private investment
by lowering interest rates, and
it plans to increase government
spending. The reform program
itself has suffered from a short-
age of trained personnel and
unavailability of adequate
credit.
The Shah, who remains per-
sonally popular, probably will
try to give his program a psy-
chological boost in the spring
by replacing Prime Minister Alam.
The Shah appears to be grooming
the wealthy and ambitious Hasan
All Mansur to lead the govern-
ment. Mansur, with the Shah's
blessing, has formed the
New Iran Party with the inten-
tion of gathering supporters
of the reform program into a
manageable political organ-
ization. Embassy officials
doubt, however, that this
party's efforts will be more
successful than were similar
efforts in the pas.
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Paris is trying to increase
trade with Communist China, but
French officials deny that early
diplomatic recognition is in
prospect.
Chinese affairs, has led to spec-
ulation that improved political
relations, including some form
of diplomatic recognition, is a
growing possibility. This has
been consistently denied at all
levels of the French Government.
The French Government has
been encouraging private busi-
ness interests to develop new
markets in China; however, there
are built-in limitations of the
extent to which French-Chinese
trade can grow. Complementary
products are few, and credit
problems continue to limit pur-
chases by the Chinese.
While French exports to
China were four times as great
as imports during the first half
of 1963, Chinese purchases were
largely of grain and are not
likely to be repeated in 1964.
Even with the grain sales, total
trade amounted to less than one
percent of French trade outside
the franc zone.
Paris' interest in promoting
cultural as well as trade con-
tacts with Peiping, together with
De Gaulle's personal interest in
French officials refuse to
make nonrecognition of Peiping
a matter of principle, however,
arguing that neither French in-
terests nor those of the West
in general are benefited by seek-
ing to isolate Communist China.
The French maintain that Chinese
acquiescence is needed for a
viable solution of the Southeast
Asian disputes, and that, in the
longer run, a more independent
China will force the Soviet
Union to reduce its pressure on
Western Europe.
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Europe
Italy: Pessimism about the
viability of Italy's new government
has lessened somewhat as a result
of the strong vote of confidence
it received in the Chamber of Dep-
uties on 17 December. Socialist
chief Nenni's authority over his
party has been strengthened by his
firm stand against pressure from its
left-wing deputies who withheld
their support on the confidence
motion. Premier Moro's position
is also somewhat firmer because of
Nenni's stance and because of the
Vatican's pressure on Christian
Democratic right-wingers not to
break party unity.
Political stability, however,
is by no means assured. Right-
wing Christian Democratic deputies
may still defect in secret votes
after parliament reconvenes next
month. Communist-inspired labor
unrest remains an ever-present
For the second time in four
months Finland is going through a
cabinet crisis brought on by dis-
agreement over domestic legislation.
Meanwhile, President Kekkonen has
continued his efforts to improve
relations with the USSR by personal
contacts with Soviet leaders.
Prime Minister Karjalainen re-
signed on 17 December after his
Agrarian-led coalition failed to
work out a mutually acceptable eco-
nomic program. His package tax-in-
crease proposal was rejected by
center and rightist parties in the
government. A similar dispute over
tax increases caused the eight-week
crisis that began last August.
Union between 29 November and 3 De-
cember and talked with an impres-
sive array of Soviet leaders, in-
cluding Khrushchev, Brezhnev, and
Mikoyan.
~In a Moscow speech,
Kekkonen placed particular emphasis
on his proposal for a nuclear-free
zone for Sweden, Norway, Denmark,
and F1.nland. He noted, however,
that his proposal had been coolly
received by the other Scandi-
navian countries.
A nonpolitical caretaker gov-
ernment of civil servants headed by
economist Reino Lehto has been ap-
pointed to serve until the present
controversy is resolved. At the mo-
ment, the alternative solutions seem
to be limited to an Agrarian minor-
ity governmenc, reconstitution of
the Agrarian-dominated majority
government, or, as a last resort,
general elections.
President Kekkonen paid a four-
day "private visit" to the Soviet
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INCREASING CUBAN CONTROL OF MILITARY INSTALLATIONS
The coastal defense cruise
missiles are now part of the
Cuban artillery forces, accord-
ing to a recent speech by Raul
Castro. Cubans have probably
been training in cruise missile
operations since spring, and the
rotation and withdrawal of some
Soviet naval personnel in Sep-
tember suggests that control of
the four operational launch sites
may have been transferred to
Cuba at that time.
Cuban involvement in the
Soviet-dominated air defense
system is also increasing.
Cuban trainees are present at
most, and probably all, surface-
to-air missile (SAM) sites in
Cuba. The former training site
at San Julian has been dis-
mantled and moved to the
Cabanas naval base, suggesting
that enough Cubans have been
trained to man the entire sys-
tem and that no further class-
room training is contemplated
at this time.
A Soviet SO-1-class sub-
marine chaser has arrived in
Cuban waters and two others
are in the Mediterranean under
tow by Soviet merchant ships
which are probably en route to
Cuba. The Cuban Navy presently
has six larger Kronshtadt-class
subchasers and is scheduled to
receive several more of an un-
specified type.
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Western Hemisphere
POLITICAL REPERCUSSIONS OF RECENT EVENTS IN BOLIVIA
Repercussions stemming from
the events surrounding the cap-
ture and release of 21 hostages
by dissident tin miners will be
felt in Bolivian politics for a
long time to come. The split
between President Victor Paz
Estenssoro and Vice President
Juan Lechin seems unbridgeable,
and an early showdown is in
prospect. This is likely to
occur next month when their party,
the Nationalist Revolutionary
Movement (MNR), convenes to se-
lect its candidate to run in the
presidential elections set for
next June.
Lechin is presently at a
disadvantage because he lost
considerable prestige in capit-
ulating to the government's de-
mands for releasing the hostages.
He was severely challenged at a
tense 16 December meeting with
the recalcitrant miners at Siglo
Veinte before they finally agreed
to free their captives. Lechin,
long-time head of the Bolivian
miners' union, was booed and
called insulting names through-
out the session.
The vice president will
probably stand on a militant
platform, however, in the hopes
of recouping his sagging pres-
tige. He has been quoted by
the press as saying that "we
will follow the path of Castro"
in continuing the struggle
against Paz. Lechin also has
said that the tactic of seizing
hostages will be repeated be-
cause "it is the only defense
we have" against the government.
Lechin may also have
thoughts of promoting an armed
insurrection if he does not get
the MNR's nomination for the
presidency. He is known to
have toyed with the idea in
the past.
President Paz also has
problems. Chief among these
is the matter of reasserting
control over the disaffected
mining area. The miners' de-
fiant stand against his govern-
ment could cause a serious set-
back to Paz' ambitious efforts
to put mining operations on a
profitable basis by removing
featherbedding workers from the
mines, and by introducing more
efficient mining techniques.
Bolivia's foreign trade is pri-
marily dependent on its exports
of tin.
The government's apparent
intention to deal harshly with
the jailed Communist mine union
leaders--whose arrest touched
off the recent crisis--also may
pose something of a problem.
Exacerbation of the miners'
antigovernment sentiment may
give Lechin the opportunity he
needs to stage a comeback.
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Western Hempishere
POSSIBILITY OF CABINET RESHUFFLE IN BRAZIL
There is a growing possi-
bility of a reshuffle of the
Brazilian cabinet during the
next several weeks. President
Goulart, however, is keeping
his own counsel on what changes
he may be contemplating.
The position of Carvalho
Pinto, the finance minister, is
perhaps the shakiest because of
widespread dissatisfaction with
Brazil's rampant inflation and
growing unemployment. The cost
of living increased over 60 per-
cent during the first ten months
of 1963 and is expected to go
up 80 percent for the year as
a whole.
Goulart is under heavy
pressure from left-wing forces
to oust Pinto. The extreme
leftist Popular Mobilization
Front is urging that Pinto be
replaced by Leonel Brizola, the
Front's nominal leader who is
also Goulart's brother-in-law.
At the same time, some influ-
ential industrialists also
appear to be actively under-
mining Pinto, possibly in hopes
of obtaining a successor favor-
ing more liberal credit policies.
Goulart so far has avoided
committing himself on his in-
tentions concerning Pinto and
Brizola. As recently as 7 De-
cember he went on record as
being satisfied with his cabinet
as it stands, but in the same
breath asserted his right to
appoint Brizola to a cabinet
post.
While the possibility that
Brizola would be appointed can-
not be excluded, it seems un-
likely, partly because such a
move probably would set off
severe political reverberations
throughout Brazil. It would be
interpreted as a desperate ef-
fort by Goulart to recoup his
declining popular support by
casting his lot with the far
left.
There may be at least two
other cabinet positions Goulart
will have to fill before long.
The Brazilian press reports
that Minister of Industry and
Commerce Egidio Michaelson has
confirmed his intention to leave,
and the Education Ministry has
remained vacant since Paulo de
Tarso resigned several weeks ago.
While there is no firm indication
as to who will get the appoint-
ments, Goulart is likely to con-
tinue his practice of attempting
to balance off the right and
left. but with a leftist bias.
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Western Hemisphere
The Dominican Republic's
provisional government has been
bolstered, temporarily at least,
by military success against anti-
government guerrillas at home
and by US recognition. However,
the regime, politically weak
and lacking capable administra-
tors, appears unlikely to sat-
isfy the country's pressing
need for effective government.
Military mop-up operations
against insurgents led by the
pro-Castro 14th of June Polit-
ical Group (APCJ) have been
slowed by difficult mountain
terrain and bad weather. Never-
theless, efforts to eliminate
the guerrillas are apparently
progressing satisfactorily. So
far three of six guerrilla
strongholds have been neutral-
ized, and the others are under
strong pressure from government
troops. As of 17 December, 15
guerrillas had been reported
killed and 47 captured, includ-
ing three of the 12 principal
APCJ leaders.
The government's military
achievements are not being
matched on the political front.
Its complicated five-stage elec-
tion plan is the object of wide-
spread public criticism. Oppo-
sition leaders fear that the
six minority parties in the mili-
tary-backed government will ma-
nipulate the election arrange-
ments to ensure their own vic-
tory. Similarly, while the res-
ignation of ultrarightist Angel
Severo Cabral from the cabinet
has momentarily lessened pres-
sure on the government from the
extreme right, this element re-
mains a serious potential threat
to hopes for fair elections.
Nor is there any prospect
for an easing of the country's
basic economic problems. The
regime continues to be faced
with rising public demands for
a rapid improvement in material
welfare, but lacks the political
strength or technical and adminis-
trative talent to meet them. More-
over, the Dominicans have not
filled the gap created by the sus-
pension of the US program, which
ordinarily constitutes their only
regular source of major foreign
economic assistance.
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Honduras: The state of
siege t a has been in force in
Honduras since the military over-
throw of the Liberal government
Last 3 October was canceled on
14 December by Chief of State
Colonel Oswaldo Lopez Arellano
following U.S. recognition of
his government. Lopez also
ordered the military commanders
to stop harassing members of the
Liberal Party, perhaps in defer-
ence to those moderate Liberal
leaders who are backing the
military's plans for eventually
restoring constitutional govern-
ment. These leaders believe
that, if given half a chance,
they will be able to gain wide
support from rank-and-file party
members for their policy of co-
operating with the military.
Although political tensions
have subsided, sporadic armed
resistance to the government
may continue. A possible threat
is posed by a newly organized
terrorist group identified by
the initials "MIL," allegedly
composed of Communists and ex-
treme leftist Liberals. The mili-
tary probably can contain any
outbreaks of terrorism that may
occur in the foreseeable future.
British Guiana: Cheddi
Jagan and other spokesmen of
his People's Progressive Party
(PPP) have been attacking the
US and the UK in increasingly
vitriolic terms. The party,
however, is paralyzed by inter-
nal divisions and is undecided
whether to contest next year's
pre-independence election or to
try to block it by resorting to
violence. The PPP's latest
effort to gain control of a
large segment of organized labor
has foundered on the refusal of
sugar workers to quit their
large anti-Jagan union and join
exclusively the one sponsored
by the PPP. However, many sugar
workers now belong to both unions
--an indication of Guianese un-
certainty over who will eventu-
ally come out on top.
Meanwhile, the opposition
parties--the People's National
Congress and the United Force--
have done little to cooperate
against the PPP beyond reaching
a tentative agreement not to at-
tack each other publicly. A new
element in the maneuvers to oust
the PPP is an offer by Trinidad's
Prime Minister Williams to put
some of his own political organ-
izers at the diposal of the United
Force.
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